Substitution for other snacks, negative health perceptions and a slowdown in growth in promising markets threatens to undermine the global chocolate confectionery market. With more snacks now available, chocolate is losing its dominant position as the default snack for many. This threat brings about opportunities that may cause a permanent shift in how chocolate is consumed around the world, with the product becoming more visible in the markets of Asia while becoming less of an impulse choice
This is an exciting time for the chocolate confectionery market, but only as a result of the difficulties it faces -the perpetual slowdown in the West is now being imitated in some markets such as China. Companies are slowly dealing with the challenges they face, but can expect a low growth environment for some time to come.
Specialist chocolate stores are evolving from a marketing gimmick to a legitimate source of sales for many manufacturers. Ferrero and Lindt have been particularly proactive in pushing their retail divisions, with the latter’s shop turnover increasing by 20% in 2015. Alongside this, more niche chocolate products will be available in high-spend chocolate markets, leading to a more fragmented competitive landscape.
Negative health connotations continue to undermine chocolate sales in Western Europe and North America. There are a wealth of new snacks such as energy bars, nuts and meat snacks, which have managed to attract audiences looking for healthy alternatives to confectionery. These products are here to stay and will make it difficult for chocolate to grow, unless it can tap into local health trends.
Relative to other snacks, chocolate is beyond the price range of many in markets such as India, China and the Middle East. This will not change any time soon. Players with a small presence will need to target second-and third-tier cities, where newly-formed middle classes have developed, in order to gain market share. That said, targeting these cities is fraught with risks, as witnessed by Hershey’s acquisition of Shanghai Golden Monkey.
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